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The following information is taken from Platts, a division of the McGraw-Hill Companies, that is a leading global provider of energy information. Platts’ real time news and pricing helps markets operate with transparency and efficiency. Additional information is available at www.platts.com.
This information is intended to present some reasons why at a time when the price of oil is dropping worldwide, why prices here at the pump have not followed suit to date. One companies gasoline supplies to the Cayman Islands originates from the Gulf Coast, the other from the Gulf Coast and Curacao. After Ike, the price of gasoline loaded into tankers in the Gulf spiked due to shortages in the US, and any tanker loaded shortly before or after Ike would have a higher priced cargo, as oil company invoices here for gasoline offloaded is based on the date that the tanker loaded. Tankers headed for the Cayman Islands now should see a significant reduction in pricing, which in turn should be reflected in the pump price. The following are some facts from Platts’ on conditions in the Gulf, where close to half of the US gasoline refining capacity is located, following Hurricane Ike.
September 16, 2008 Platt’s Oilgram Hurricane Fact Sheet: “The following fourteen Gulf Coast refineries remained shut or were running at reduced rates Tuesday: Valero Houston (130,000 b/d, Valero Texas City (245,000 b/d), Total Port Arthur (174,000), Conoco Phillips Sweeny (247,000 b/d), Marathon Texas City (76,000 b/d, Shell Deer Park (34,000 b/d), BP Texas City (475,000 b/d), Pasadena Refining (120,000 b/d), Lyondell Basell Houston (270,000 b/d), ExxonMobil Baytown (562,500 b/d), ExxonMobil Beaumont (348,500 b/d), Motiva Port Arthur (285,000), Calcasieu Lake Charles (32,000 b/d)”
September 25, 2008. Platt’s Oilgram Hurricane Fact Sheet: “Mexico’s state oil company Pemex said Wednesday it had been forced to cut crude production by 250,000 b/d because US refineries hit by Ike have been unable to handle shipments. Seven US refineries that process Mexican crude have either shut or are operating at reduced capacity because of the damage caused by Ike, Pemex said. The results have been delays. With it’s own storage full, Pemex Tuesday shut in 250,000 b/d of crude production.”
October 8, 2008. Platt’s Latin America Wire: “Extreme length among Latin spot crudes is unlikely to improve anytime soon as several refineries struggle to return after Hurricane Ike including ExxonMobil’s Beaumont operation.”
October 8, 2008. Platt’s OPR Extra: “An armada of imports to the US and a steep rebound in refinery output sent total US gasoline inventories soaring 7.2 million barrels to 186.8 million barrels”
Even though oil prices dropped sharply, refineries were unable to produce the cheaper gasoline, and with a high demand and a short supply prices remained higher in the US after the hurricane. On the bright side, prices this week at most retail sites should show a significant drop in prices. This trend should continue as most refineries are back on line and oil prices continue to drop worldwide.
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